The Board of Pensions of the Church of the Nazarene has authorized additional APS (Annual Pension Supplement) contributions to the accounts of eligible pastors in the Nazarene 403(b) Retirement Savings Plan, according to Kevin P. Gilmore, executive director of Pensions and Benefits USA (P&B).
Gilmore said the board’s action means the accounts of eligible active ministers, who received bonus and/or matching contributions from P&B for the 2021 APS program, received additional contributions into their accounts on April 18, 2022. Pastors received an additional bonus contribution equal to 50% of what was previously paid by P&B, and match contributions were duplicated.
According to Gilmore, this action resulted in an average extra bonus contribution of $169 for 3,290 pastors, and an average extra match contribution of $243 for 1,350 pastors. Those who received both a bonus and match in 2021, on average, received total extra contributions of $412.
Under the APS program, pastors whose churches meet 100% of their P&B Fund allocation receive a bonus contribution. The matching contribution applies when churches also meet 100% of their Education allocation and voluntary contributions are made to the pastor’s 403(b) account from payroll withholding and/or directly by their church employer. The most effective way to meet the future needs of pastors in retirement is when the pastor, local church, and P&B all contribute to the pastor’s 403(b) account.
The board began considering the potential for enhancing retirement benefits at its October meeting. In February, they authorized plans for an extra payment to retirees in the Single Defined Benefit Plan (SDBP). This latest action represented the second step of a strategy to also enhance retirement benefits for participants of the “defined contribution” program [403(b) plan].
Beyond this, as earlier announced, P&B has eliminated the $39 ($9.75 per quarter) annual administrative fee charged through Fidelity Investments to 403(b) participant accounts. This is a benefit that not only enhances the retirement of both active and retired participants within the plan, but will continue in perpetuity.
“These actions are possible thanks to the continued stable support of the P&B Fund by districts and churches and strong investment returns over the past few years,” Gilmore said. “These factors have encouraged us about the future due to the funded status of our SDBP reaching an estimated 100% at the close of 2021. We are hopeful this bonus will incentivize pastors to remain actively engaged in preparing for retirement and encourage church boards to continue to come alongside them in the process.
“We know many pastors struggle to make ends meet so planning for retirement often gets overlooked or placed on hold. Unless the Lord returns beforehand, retirement is inevitably coming for all of us, and we want to support our pastors as they plan for their retirement. One of the ways we do this is to provide resources to supplement their income for when that season of life becomes a reality.
“We recognize the Lord has blessed us to be in a positive financial position with our retirement plans like we have not seen before. But it was not by accident. In prior years, the leadership of the church and P&B made some difficult decisions to shore up the SDBP, and we are now reaping the benefits of their actions. I want to thank our board for taking these first steps toward benefit enhancements as we, appropriately, continue to monitor our progress over the next few years.”
The additional APS contributions described above were authorized by the board as a one-time event and should not be construed as a permanent modification to the APS program. A determination for any future extra contributions is a future decision that will be based on circumstances at that time. The Board of Pensions has authorized a study to explore ways to encourage greater participation in the 403(b) plan by churches and pastors through possible financial incentives.
Learn more about the Nazarene 403(b) Retirement Savings Plan and Annual Pension Supplements at this link.